6/10 Pricing Anomaly: 10/1 ARM rates better than 7/1 right now (loan, interest rate, credit)

[Pfhtex]

This usually lasts about a day, so if you're Floating an ARM right now, check with your lender on the 10/1.

[Focused Husbandad]

Thanks for sharing. Are there lenders that offer options to make principal reduction payments and/or lump sums to reamortize? This might be the best option for me since:

Lower interest rate
Relatively low remaining balance

[SmartMoney]

Originally Posted by Focused Husbandad

Thanks for sharing. Are there lenders that offer options to make principal reduction payments and/or lump sums to reamortize? This might be the best option for me since:

Lower interest rate
Relatively low remaining balance

It depends on a who is holding your loan. Fannie servicers are required to accept principal curtailments with a re-amortization requests. They may charge administrative and recording fees. If portfolio ARM, the each lender is different. We charge fees on the 30 year fixed, but not the ARMs.

[Focused Husbandad]

Originally Posted by SmartMoney

It depends on a who is holding your loan. Fannie servicers are required to accept principal curtailments with a re-amortization requests. They may charge administrative and recording fees. If portfolio ARM, the each lender is different. We charge fees on the 30 year fixed, but not the ARMs.

Thanks. Are you aware of any website that keeps a summary of ARM comparisons, including periodic and lifetime caps?

[SmartMoney]

Originally Posted by Focused Husbandad

Thanks. Are you aware of any website that keeps a summary of ARM comparisons, including periodic and lifetime caps?

No, I wish there was because our caps and margins are some of the lowest. Fannie has standardized caps on their ARMs......it's been so long since I've originated a Fannie ARM (portfolio since 2008), I could be off, but I believe Fannie's shorter term ARMs have 6/2/6 caps and a 2.75 margin. The longer term ARMs are 5/2/5 (longer term is fixed 5 years or longer for the initial fixed period).

For those that want to know, the fist number in the caps is how much over the start rate the adjusted rate can go. So, if the start rate is 3.0%, the first adjustment in an ARM with 5/2/5 caps, the rate cannot exceed 8.0% (3% + 5 = 8%). All subsequent adjustments (the 2nd number) will be capped at 2% above (and below) the prior year's rate. And, the third number is the life of loan cap.

The other parts of the equation are the index and the margin. The index is typically the one year Treasury Security or the one year LIBOR. The margin is what the bank adds to the index to determine the rate at the time it's due to change. Right now, the one year Treasury is .59. So, if a rate for adjustment were calculated today, it would be .59 + the margin. In this example, the result would be 3.34%, rounded up to the nearest 1/8th, or 3.375%.

Credit unions tend to have lower caps and are hard to beat. For example, many use a margin of 2.25 which is 1/2% below Fannie. Right off the bat, you know the adjustments will be lower. So, in the same example as above, 2.25% + .59 = 2.84, rounded up to 2.875%. so, there is so much more to compare when shopping for an ARM. There are some random sites where the lender pays to be listed, but when you are among the lowest, you don't need to pay to be listed. I wouldn't be inclined to trust a site where a lender's payment is required (like bank rate dot com).

(The general info was not for the OP, but other readers trying to get information).